Question
You have been asked to continue your work on the SpringFit Corporation audit. The journal entries for the current year are shown as follows: Journal
You have been asked to continue your work on the SpringFit Corporation audit. The journal entries for the current year are shown as follows:
Journal Entries, 20Y5
PAGE 23
JOURNAL
ACCOUNTING EQUATION
| DATE | DESCRIPTION | POST. REF. | DEBIT | CREDIT | ASSETS | LIABILITIES | EQUITY | |
|---|---|---|---|---|---|---|---|---|
| 1 | Jun. 30 | Interest Expense |
| 19,397.00 |
|
|
| |
| 2 |
| Premium on Bonds Payable |
| 3,103.00 |
|
|
| |
| 3 |
| Cash |
Considering the journal entries for both years, answer the following questions.
| 1. | What is the yearly payment amount required for the note payable? (Assume it is an installment note.) |
| 2. | What is the interest rate on the note payable? |
| 3. | Were the bonds in the entry on Dec. 31 of 20Y5 redeemed at maturity? No |
| 4. | You suspect there is an error in one of the bond redemption entries. Assuming that the amounts are correct, which entry is questionable? Both entries are correct. Why? There is no error. |
| 5. | Why do some bonds sell below face value? None of these answers is correct. |
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access with AI-Powered Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started
Auditing A Risk Based Approach to Conducting a Quality Audit
Authors: Karla Johnstone, Audrey Gramling, Larry E. Rittenberg
10th edition
978-1305080577
